Liberals Are Winning the Culture War
Chris Hayes explains why liberals are winning the culture war (after an undeletable 30-second ad):
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Mortgage Settlement Is Like “Giving Banks a Parking Ticket for a Felony Offense”
Here Amy Goodman and Juan Gonzalez of Democracy Now interview Yves Smith of the popular Naked Capitalism blog about the Obama administration’s announced settlement with mortgage lenders.
Yves Smith has been one of the most prominent critics of this settlement (see her “The Top Twelve Reasons Why You Should Hate the Mortgage Settlement” and “Mortgage Settlement as Attorney General Sellout: Deal is Not Done, and Final Version Guaranteed to be Worse Than Advertised“).
Smith says that this settlement sets the price of fraud at from $1500 to $2000 (per mortgage … that’s less than most title insurance, isn’t it?)
Is the Facebook IPO Pointless?
Check out this interesting article in the Financial Times by John Gapper:
“Facebook ought to ditch its public offering“
According to Gapper, who has read the prospectus, Facebook is flush with cash. It is, he says, “a veritable cash machine.”
Gapper says Zuckerberg should call the whole thing off:
“Its sole tangible purpose for the IPO proceeds is to meet a tax obligation that will be triggered by going public.”
Read the full article here.
Did the Feds Just Kill the Cloud Storage Model?
Reprinted from Washington’s Blog (January 21, 2012)
Megaupload Type Shutdowns and Patriot Act Are Killing Cloud Storage
The government’s takedown of the 800 pound gorilla online storage site Megaupload may have killed the cloud storage model.
Many innocent users have had their data taken away from them.
As PC World notes:
The MegaUpload seizure shows how personal files hosted on remote servers operated by a third party can easily be caught up in a government raid targeted at digital pirates.
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Before its closure MegaUpload had 180 million registered users and an average of 50 million daily visits, claimed a total visitor history of more than one billion, and accounted for about four percent of all global Internet traffic….
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Take, for example, Videobb.com, a site that appears to be similar to Megavideo. Videobb bills itself as an ideal place to share videos without ever having to worry about “disk space or bandwidth again.” Videobb is “safe, secure and easy” the company says, and that’s probably true; at least unless the FBI and the Department of Justice decide that videobb is ripe for a takedown. Behind the scenes, videobb is rife with pirated content just as Megavideo was.
A quick check of sites that index pirated content shows you can find recent episodes of The Big Bang Theory, Modern Family, and the recent movie Contagion available for free streaming on Videobb.
Videobb isn’t alone, either; services such as Novamov, ZShare, and VidXDen all offer file-sharing services similar to Megavideo and all of them are being used (or at least have been used) to distribute pirated content. The trick is that you won’t see the pirated content on these sites’ front pages; you have to know how to access it through third-party sites that contain links to the secret files.
If you use any of these sites to store or distribute your own non-infringing files, you are wise to have backups elsewhere, because they may be next on the DOJ’s copyright hit list.
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Keep in mind that when you use these services you also make it easier for the government, and possibly hackers, to peer into your files without your knowledge — but that’s a discussion for another day.
Bottom line: if your cloud service offers file storage on the front end and shows pirated video out the back, don’t be surprised if your files vanish one day.
In other words, the government is exercising the power to seize all of the legal property held in a storage facility because a handful of crooks have illegal property in theirs.
And if that’s not enough to kill your enthusiasm for cloud storage, CIO points out:
Worries have been steadily growing among European IT leaders that the USA Patriot Act would give the U.S. government unfettered access to their data if stored on the cloud servers of American providers—so much so that Obama administration officials this week held a press conference to quell international concern over the protection of data stored on U.S. soil.
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Anxiety was heightened last year when a Microsoft UK managing director admitted that he could not guarantee that data stored on the company’s servers, even those outside the U.S., would not be seized by the U.S. government.
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Escaping the grasp of the Patriot Act, however, may be more difficult than the marketing suggests. “You have to fence yourself off and make sure that neither you or your cloud service provider has any operations in the United States,” explains [Alex Lakatos, a partner and cross-border litigation expert in the Washington, D.C. office of Mayer Brown], “otherwise you’re vulnerable to U.S. jurisdiction.” Few large IT customers or cloud providers fit that description in today’s global business environment. And the cloud computing model is built on the argument data can and should reside anywhere around the world, freely passing between borders.
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So, what’s a European cloud customer to do—or, for that matter, a U.S. customer anxious about how their cloud provider might respond to a government request for data under the Patriot Act? Cloud and other technology service providers have a mixed record when it comes to keeping customer data out of government hands. “For the cloud service providers, their life may be easier if they give the government whatever it’s asking for,” Lakatos says.
How Local Governments Can Fight Back Against the Foreclosure Crisis
Reprinted from New Deal 2.0 (January 18, 2012)
Cities can use local housing codes and land banks to push back against banks’ reckless behavior.
Since the beginning of the economic downturn, Congress has passed numerous pieces of legislation aimed at stabilizing the housing market. Their legislative efforts succeeded in stabilizing financial markets, but foreclosures have continued unabated, affecting families and neighborhoods across the country. While the foreclosure crisis continues to be a drag on the economy, its effects are felt most acutely in communities and neighborhoods.
For the last decade or so, growth in America’s housing stock was driven primarily by investment rather than demand. As a result, there is a surplus in the housing market, which causes many foreclosed homes to sit vacant for years, generating no revenue for their (often institutional) owners who have no intention of occupying the property themselves. Rather, the institutional owners must either pay to maintain the property or let it fall into disrepair. In the many cities where this is the case, it is economically rational for the lender to modify the mortgage, if possible, and allow the current occupants to remain in their home. There are two benefits to such an arrangement: (1) the lender will not be responsible for maintaining the property, and (2) the property will continue to generate revenue for the lender in the form of mortgage payments.
In refusing to modify mortgages, lenders are often acting irrationally. Despite many attempts, the federal government has failed to pass legislation that would force or sufficiently incentivize lenders to modify mortgage principals on a large scale. As a result, foreclosures continue and local governments are left to bear a disproportionate share of the burden. The harms of abandoned property are well-documented: nearby property values decrease, property tax revenues decrease, the community’s safety and health are often put at risk, and a negative perception keeps out new investment.
Not all localities, however, are letting these institutional lenders harm their neighborhoods without a fight. Increasingly, they are holding absentee and institutional lenders accountable for the mess their mindless foreclosures create within their jurisdiction. The most successful approaches have included two components: strong code enforcement and a land bank. Land banks are local, usually governmental, entities that can acquire, hold, and dispose of properties according to community needs and priorities. The best way to explain the process is to walk through the steps.
The mortgagee, often a bank, forecloses a mortgage that the homeowner is no longer paying. The bank may not be able to resell the property, so it sits vacant. This is happening all across the country. The New York Times reported that there were 15,000 abandoned properties in Chicago back in October 2011, most of which resulted from foreclosures. Ideally, the property would not be sitting vacant at all, but the problem of vacancy is compounded when institutional owners fail to manage the property. Most institutional owners, often the big banks, are not well-equipped to maintain properties at the standard required by local housing codes. As a result, it often falls on the local government to board up broken windows and mow overgrown grass.
Here, code enforcement comes into play (which is sometimes supplemented by a vacant property registration system). The owners can be fined when the property does not meet code. The fine must be sufficiently large to give the absent owners an incentive to either maintain or sell the property. If the institutional owner does not pay the fine, it can be placed against the property as a lien. Eventually, non-payment allows the city to foreclose the lien and take the property into its inventory, ideally transferring it to a land bank with expertise in land management to assist in long-term community development.
Alternatively, the banks may choose to donate unoccupied properties in their inventories as a way to avoid paying the steep fines. The case study of Cleveland has been widely publicized in the New York Times and 60 Minutes, among other media outlets. The banks that own dilapidated property in Cleveland, including Bank of America, J.P. Morgan Chase, and Wells Fargo, are so tired of paying fines that they are actually donating them to the local land bank and sometimes paying it up to $7,500 to demolish formerly-occupied properties! The inefficiency of this option for banks is startling and, if banks get their act together, will result in more modifications in lieu of foreclosures.
Cities facing high rates of foreclosure and high rates of property abandonment would be well-advised to adopt this model. Doing so on a widespread basis will have one of two positive effects: either the institutional owner will maintain the property in a way that lessens the harm to the community or the locality will be able to impose large fines and eventually take control of the abandoned property. Without a successful national program to decrease foreclosures, this is the most powerful option local governments can adopt to minimize the effects of the foreclosure crisis.
Kristen Tullos is a Roosevelt Institute Pipeline Fellow and a third-year student at Emory Law School in Atlanta .
How GOP Candidates’ Economic Plans “Screw the Middle Class”
The details are in the first four minutes of this video:
Why Entrepreneurs Flourish More in Welfare States (and Not so Much in U.S.)
Mike Kimel, co-author of Presimetrics, has a good blog post over at Angry Bear. He looks at evidence that entrepreneurial risk-taking is enhanced in societies that backstop such risks with a basic high-level of social support (“welfare states”). This is completely contrary to the laissez-faire myth of rugged individualism. It may also help explain why things haven’t been going too well here for the last several decades (ever since the advent of “Reaganomics,” an economic philosophy named after a B-movie actor).
The US is not, for many, the land of opportunity it is touted to be, and is now being beaten out by countries like Denmark and Canada. Big government countries, countries where Americans seem to believe people aren’t motivated to get off their duff, are actually quite entrepreneurial and offer offer their citizens a lot of opportunity.
Meanwhile, one other thing to note… growth, real economic growth, has been slowing for decades in the US. George W Bush’s term, even prior to the start of the Great Recession, compares unfavorably with the 1970s. The highly touted Reagan years, for instance, saw much slower growth than, say, the big government LBJ administration or the even bigger government New Deal years.
What is going on here? Is it really the catch-up effect, whereby wealthy countries like the US necessarily grow more slowly than other countries? Or is there a Great Stagnation going on? And if so, why?
I think one explanation for this is the Peltzman effect. Sam Peltzman once noted that, in response to some types of regulation, people can have a tendency to change their behavior in ways that counteracts the intended purpose of the regulation. For instance, some bicycle and motorcycle riders will take greater risks when forced to wear helmets, assuming that the helmets make them safer and more impervious to accidents.
Now, economic advance depends on creative destruction, and creative destruction requires people to take risks. Come up with a great idea for a super duper new widget and it has zero effect on anything if you don’t go out and try to market the thing.
But take two people, both of whom independently came up with the same idea for that super duper new widget. One lives in the US, the other in Denmark. Which one gives up his/her job to start a new company? The American or the Dane? My guess is the Dane will, precisely because the Dane, unlike the American, retains a safety net.
Read Kimel’s full post here.
Wealth Inequality Worse in U.S. Than in Ancient Rome
Tim De Chant has an interesting post over at his Per Square Mile blog, discussing a recent academic study comparing levels of inequality in Ancient Rome with levels of inequality in today’s America. The scholars, using the Gini Index, found that “the top 1 percent of Roman society controlled 16 percent of the wealth, less than half of what America’s top 1 percent control.”
Over the last 30 years, wealth in the United States has been steadily concentrating in the upper economic echelons. Whereas the top 1 percent used to control a little over 30 percent of the wealth, they now control 40 percent. It’s a trend that was for decades brushed under the rug but is now on the tops of minds and at the tips of tongues.
Since too much inequality can foment revolt and instability, the CIA regularly updates statistics on income distribution for countries around the world, including the U.S. Between 1997 and 2007, inequality in the U.S. grew by almost 10 percent, making it more unequal than Russia, infamous for its powerful oligarchs. The U.S. is not faring well historically, either. Even the Roman Empire, a society built on conquest and slave labor, had a more equitable income distribution.
To determine the size of the Roman economy and the distribution of income, historians Walter Schiedel and Steven Friesen pored over papyri ledgers, previous scholarly estimates, imperial edicts, and Biblical passages. Their target was the state of the economy when the empire was at its population zenith, around 150 C.E. Schiedel and Friesen estimate that the top 1 percent of Roman society controlled 16 percent of the wealth, less than half of what America’s top 1 percent control.
… what we see as the glory of Rome is really just the rubble of the rich, built on the backs of poor farmers and laborers, traces of whom have all but vanished. It’s as though Rome’s 99 percent never existed. Which makes me wonder, what will future civilizations think of us?
Read the full post here.
